Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard= 1 direct labor hour per unit
The total budgeted overhead at normal capacity is $1,080,000 comprised of $420,000 of variable costs and $660,000 of fixed costs.
During the current year, Byrd produced 74,000 putters, worked 98,300 direct labor hours, and incurred variable overhead costs of $133,200 and fixed overhead costs of $612,000.
First, we need to calculate the estimated overhead rate:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= (420,000 + 660,000)/120,000
Estimated manufacturing overhead rate= $9 per direct labor hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 9*98,300= $884,700
Finally, the total overhead variance:
Overhead variance= real overhead - allocated overhead
Overhead variance= 745,200 - 884,700
Overhead variance= 139,500 favorable
